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PG&E Guilty on Charges Stemming From 2010 Blast

SAN FRANCISCO (CN) — A federal jury on Tuesday found Pacific Gas and Electric guilty of five counts of violating pipeline safety laws and one count of obstructing an investigation of the 2010 San Bruno pipeline explosion.

PG&E was facing a total $562 million fine for 12 criminal counts, but prosecutors last week reduced the maximum fine to $6 million without explanation.

A second phase of the trial was set to begin after a verdict was reached to determine a fine based on how much PG&E saved by intentionally cutting corners on safety.

The utility giant now faces a $3 million fine for the six counts on which it was found guilty.

PG&E was indicted in 2014, four years after Line 132 exploded in a residential neighborhood of San Bruno on Sept. 9, 2010, killing eight people, injuring 58 and destroying 38 homes.

During a six-week trial that started June 17, prosecutors attempted to prove through witness testimony and internal PG&E records that the company deliberately shirked safety laws for the sake of profits.

PG&E in turn argued that requirements under the U.S. Pipeline Safety Act were not completely clear, and that the law gave engineers leeway to use their best judgment to make safety decisions.

Jurors found on Tuesday that PG&E willfully violated five minimum safety standards for several of its pipelines, starting with the company's intentional failure to gather and integrate data for its pipelines.

Prosecutors showed multiple documents and emails proving that PG&E had missing or inaccurate pipeline data in its geographic information system.

At the time Line 132 exploded in 2010, the pipe was listed as seamless in PG&E's flawed record system, even though it was actually welded with a long seam — the type of seam engineers consider more susceptible to leaks and ruptures, according to witness testimony.

The jury also found PG&E purposely failed to identify and evaluate threats for three pipeline segments, including Line 132, and that it did not include potential threats in its required assessment plans.

Additionally, the jury found PG&E guilty on two counts of intentionally failing to prioritize pipelines as high risk after it exceeded the maximum pressure on those lines during planned pressure spikes.

Under a grandfather clause established in 1968, operators could set the maximum pressure for pipelines installed before 1971 at the highest pressure a line experienced over the last five years without conducting a pressure test.

PG&E argued that law encouraged it and other utility companies to spike the pressure to the maximum on older pipelines, like Line 132, every five years.

However, when it conducted planned pressure spikes, PG&E also claimed it could not avoid raising the pressure slightly above the maximum because there's always some "fluctuation" with pressure readings.

When pressure exceeded the maximum on those lines during the planned spikes, federal law required PG&E immediately test or replace those lines.

Instead, PG&E continued to perform less costly external corrosion surveys on its pipelines to save money, according to evidence presented at trial.

During an investigation into the San Bruno explosion, PG&E submitted a document detailing its practice of not considering pipelines "high risk" unless the pressure climbed more than 10 percent beyond the maximum allowed, a procedure that contradicts federal law.

PG&E later recalled that document, telling investigators it was merely a draft that was never adopted as an official policy.

A letter PG&E sent in April 2011 recalling the "draft" became a key piece of evidence to support the government's charge that PG&E deliberately obstructed the National Transportation Safety Board's investigation of the 2010 explosion.

After the verdict was revealed, U.S. District Judge Thelton Henderson thanked the jury for dedicating nearly eight weeks of service to the trial.

"There's no doubt in my mind that everyone knows you've been a hard-working, diligent jury that listened carefully and learned from the material presented to you," Henderson said.

PG&E released a statement Tuesday, saying it remains focused on the future but will "never forget the lessons of the past."

"We have made unprecedented progress in the nearly six years since the tragic San Bruno accident and we are committed to maintaining our focus on safety," PG&E stated.

San Bruno Mayor Jim Ruane could not be reached for comment Tuesday, but during closing arguments last month said that he was disappointed no individual PG&E employees faced criminal prosecution, especially since evidence was presented at trial showing certain employees made decisions to ignore over-pressurizations and not to adequately test pipelines.

Ruane, who was first elected mayor in 2008 and took office before the explosion, said he hopes any fines PG&E has to pay aren't merely seen as "the cost of doing business."

The U.S. Attorney's Office on Tuesday still had no explanation on why it dropped Alternative Fines Act charges against PG&E last week and reduced the maximum fine from $562 million to $6 million.

Last year, the California Public Utilities Commission hit PG&E with a $1.6 billion fine, the largest penalty ever assessed against a utility company in the state's history.

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